The U.S. government is taking significant steps to expand its national stockpile of essential minerals, including lithium and rare earth elements, which are critical for renewable energy technologies and military applications. Treasury Secretary Scott Bessent recently unveiled plans aimed at increasing these stockpiles, marking a notable shift in strategy as the government will also acquire stakes in the companies responsible for supplying these minerals.
Historically, the U.S. has maintained a stockpile of minerals for various strategic purposes, but the new approach introduces taxpayer investment in private mining companies. This move raises important questions about the risks associated with mining investments, which are known for their volatility and narrow profit margins. As taxpayers now become shareholders in companies such as Trilogy Metals, LithiumAmericas, and MP Materials, Congress must ensure rigorous oversight and transparency regarding potential financial risks.
One major concern involves the risk of oversupply, driven by the substantial taxpayer subsidies currently fueling a mining boom. President Donald Trump, during a conversation with the Australian prime minister on October 21, 2023, remarked that the U.S. could see an abundance of critical minerals soon, potentially leading to a plummet in their value. He cited the substantial financial commitments made through the Defense Production Act and the Department of Energy’s funding, which together total over $350 billion.
Despite the tradition of requiring publicly traded mining companies to disclose risks to investors, a recent executive order signed by the president allows public funds to flow into mining projects without standard investor disclosures. This lack of transparency could expose taxpayers to the financial risks associated with mining ventures that may not yield profitable returns.
The need for enhanced congressional oversight is evident, especially in light of the 1872 Mining Law, which governs domestic mining practices. This law allows individuals, both domestic and foreign, to privatize public minerals without compensating taxpayers who own the land. In contrast, other countries have established more structured systems that require royalties and revenue sharing from mining activities.
To address these systemic issues, advocates like Aaron Mintzes, deputy policy director at Earthworks, suggest the passage of the Mining Waste, Fraud and Abuse Prevention Act, which aims to modernize mining regulations and promote fairness for taxpayers. Additionally, Mintzes emphasizes that instead of merely stockpiling minerals, the government should focus on innovation in mineral usage.
For instance, the Department of Energy’s Critical Materials Institute has developed alternative materials for industrial motor magnets that perform comparably to traditional rare earth magnets. This shift towards innovation, research, and development could provide more sustainable solutions for mineral supply chains rather than relying on risky investments in the mining sector.
In conclusion, while expanding the mineral stockpile is essential for national security and clean energy initiatives, it is crucial that the U.S. government prioritizes oversight and innovation over direct investments in mining companies. By modernizing mining laws and promoting new technologies, the U.S. can secure its mineral supply chains more effectively than through mere stock ownership in private enterprises.
